The new triple alliance: Employer, employee and primary care

Dec. 9, 2020 / By Steve Delaronde

More than half of Americans receive health insurance through their employer. Two-thirds of covered workers are insured by companies that assume all the risk for health care costs and do not transfer this risk to health plans. These “self-insured” or “self-funded” companies may still contract with health plans for physician networks, claims processing and other administrative services, but they are paying directly for the health care services received by employees and their families, which gives them an added incentive to control costs.

Keeping workers and their families healthy is a top business priority. Sick employees and family members reduce productivity and increase time lost to sickness, recovery and caring for sick family members. Self-funded companies are particularly vulnerable to rising health care costs since they directly bear the impact of health care utilization and costs increases.  This means that primary care is more important than ever to help companies keep their employees healthy while directing them towards high quality, low-cost health care.

Employees bear healthcare cost increases

The American industrialist Henry Kaiser understood the importance of integrated and accessible health care services for workers. In 1938, he contracted with Dr. Sidney Garfield’s group medical practice in 1938 to provide health care services for workers building the Grand Coulee Dam in Washington.  Kaiser’s focus on preventive medicine, prepayment for integrated services, salaried physicians not incented by fee-for-service and coverage for worker’s families resulted in benefitting all three stakeholders—the employer, employee and primary care physicians.

Health care costs have increased dramatically since the 1930s, especially in the past 20 years. Employers are asking their workers to absorb health care cost increases by paying a greater share of premiums, higher deductibles and higher co-insurance and copays. This ultimate impact to the employee is lower or stagnant wages. In fact, health care costs have increased 2 times faster than wages over the past 10 years. High deductible plans are becoming the norm, with many workers responsible for the first $2,000 or more of health care costs per year—and that’s after contributing to premiums, which now top more than $20,000 for the average family.

Employer frustration

Employers are becoming increasingly frustrated by health plans that are unable to keep costs from rising. This has resulted in some employers bypassing health plans altogether and contracting directly with physicians. Direct Primary Care (DPC) offers direct access to primary care, as the name implies, but charges a much lower monthly fee than the average premium. Unlimited appointments, same day visits, and 24/7 access to telemedicine services are available to workers and their families. Employers can then purchase a stop-loss policy for their employees that covers high cost services.

Another option for self-funded employers is to work with a health plan that offers limited, or narrow, networks of primary care physicians and other health care services. Narrow networks are available through traditional insurers, as well, but increasingly are being offered by smaller plans with a focus on primary care. One example is Centivo , a new type of health plan that offers a low-cost, primary care-based model to self-insured employers. It offers providers the tools they need to guide their patients to low-cost and high-quality specialists, labs, imaging, and hospitals.

The gradual movement of employers and their insured workers to self-funded plans over the past 20 years means that most commercial health plans serve as third party administrators for the majority of their membership. These plans are coming under increasing pressure to allow greater cost and quality transparency so that members can make more informed choices about the health care services they receive. The managed care backlash of the 1990s and the resistance to the gatekeeper HMO model is yielding to an acceptance of limited provider choice in the name of cost and quality. Self-funded employers are in an optimal position to lead this charge.

The role of primary care

Primary care is the cornerstone of a successful transition to achieving the cost savings and quality improvement that comes with a narrow network. Primary care teams need tools to identify the specialists, labs, imaging centers and hospitals that offer the greatest value to the patient. This means that the primary care physicians, nurses and outreach workers that comprise the primary care team must be properly incented in a value-based, rather than a fee-for-service, model.

The Medicare Accountable Care Organization (ACO) model emerged when the Affordable Care Act of 2010 authorized the Medicare Shared Savings Program (MSSP) and laid the foundation for shared savings partnerships that Medicaid and commercial payers followed. While health systems led most new ACOs from 2010 to 2015, this has shifted to physician groups over the past five years. Physician-led ACOs have financial incentives that are better aligned with keeping members out of emergency rooms, hospitals and operating rooms. As a result, they have been outperforming ACOs led by hospitals

The next decade will continue the shift towards ACOs and other delivery models led by physicians with an emphasis on primary care. The 2020s will likely be a decade of increasing partnership between primary care and employers. Health plans and health systems that recognize and respond to this trend will enjoy the benefits of a partnership that benefits American employers and workers, as well as primary care providers.

Steve Delaronde is manager of products for Population and Payment Solutions at 3M Health Information Systems.

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